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1.	How do mortgage lenders qualify applicants for a loan? Answer
2.	How much will I have to put down on a new home? Answer
3.	Aren’t there advantages to putting down more money when you buy? Answer
4.	What is mortgage insurance? Answer
5.	Should I get a fixed rate or an adjustable rate mortgage? Answer
6.	How do rates change on an adjustable rate loan, and how high can they go? Answer
7.	What are “points”? Answer
8.	Why would I want to pay points? Answer
9.	Is it better to stretch my payments out over 30 years to get the lowest payment, or should I go for a shorter term? Answer
10.	I’ve heard that simply making extra principal payments each month can help you save in the same way as having a shorter term. Is that true? Answer
11.	When is a good time to refinance? Answer
12.	How much should I put aside for closing costs when I get a new mortgage? Answer
13.	Is there any way I can get out of paying so much money at closing? Answer
14.	What kind of documentation will I need when I apply for my mortgage? Answer
15.	What if I’m self-employed and don’t have W-2 income? Answer
16.	Can I use a gift to help with my down payment? Answer
17.	How long does it typically take to get approved? Answer
18.	How long does it take to close on a mortgage? Answer
19.	How do I apply for a loan with Monarch Mortgage? Answer

Q :	How do mortgage lenders qualify applicants for a loan?
A :	Mortgage lenders use some basic rules of thumb to figure out how much a borrower can qualify for: " Check your housing payment. Roughly speaking, your housing payment, including tax and insurance escrows, should be about 28% of your before tax monthly income. " Check your other credit obligations. Add up all your other monthly non-housing debt payments (loans, credit cards, automobile payments). When you total these and add them to your new housing payment, the combined total should be about 36% of your before tax monthly income. These are guidelines, of course, and individual circumstances are always taken into account.

Q :	How much will I have to put down on a new home?
A :	Many people are surprised to find out just how little it takes for a down payment today. Here are a few programs worth considering: • Our flex 97 program requires only 3% down for qualified homebuyers. • Conventional Fixed Rate Mortgages generally start with only a 5% down payment. • Our zero down advantage program allows 100% LTV • Our 103% program allows 103% LTV with 3% closing costs rolled into loan.

Q :	Aren’t there advantages to putting down more money when you buy?
A :	Absolutely. By putting down more money, you lower your monthly mortgage payment, so you can afford a more expensive home. What’s more, if you put down 20%, you probably won’t have to pay mortgage insurance.

Q :	What is mortgage insurance?
A :	That’s a special insurance policy that most lenders require in return for lending with less than 20% down. It protects the lender in case the borrower is unable to pay their loan back. Mortgage insurance adds about $56 to a monthly housing payment for a $125,000 loan with 5% down payment.

Q :	Should I get a fixed rate or an adjustable rate mortgage?
A :	Each product offers distinctive benefits that may suit your situation. Choose the one that’s right for you. Fixed Rate Loans: • Benefit: Lock-in your rate for the life of your loan, no need to worry about rates going up. • Considerations: If rates go down, you will have to refinance to take advantage of them. Adjustable Rate Loans: • Benefit: Many adjustable rate loans offer special introductory rates that let you pay less each month in the first years of your loan. Sometimes you can buy a larger home with an ARM. Your rate may go down when market rates go down, depending upon the terms of your loan. • Considerations: Your rate could go up as well as down. You need to be prepared to deal with a larger payment in the future.

Q :	How do rates change on an adjustable rate loan, and how high can they go?
A :	Each type of adjustable rate loan is different. For example: on a one-year adjustable rate loan, the rate can change every year. Other adjustable rate programs provide adjustment terms of varying lengths. Rates usually move in accordance with some well-known index, such as treasury securities. Other Adjustable Rate Features: • Interest rate “caps” limit how much the rate can change. Most loans have two caps, a “change cap” and a “lifetime cap”. • Change Caps limit interest rate changes each time the rate review period comes up. A common review cap limits changes to 2% (e.g. from 6% to 8%). • Lifetime Caps restrict how much the rate can go up over the entire time you have the loan. A common lifetime cap is 6% (e.g. if it starts at 6%, it can never go higher than 12%). Caps on individual loans may vary.

Q :	What are “points”?
A :	Points are tax deductable pre-paid interest charges you may choose to pay at closing. Each point is equal to 1% of the mortgage amount.

Q :	Why would I want to pay points?
A :	For every point you pay at closing, you can reduce the rate you pay for the lifetime of the loan. For example, paying one point on a thirty-year mortgage could reduce your interest rate from 7.50% to 7.25%. Points cost a little more up front, but in most cases you’ll save money over the life of the loan, especially if you’re planning on staying a few years. To find out if paying points makes sense for you, ask your loan consultant.

Q :	Is it better to stretch my payments out over 30 years to get the lowest payment, or should I go for a shorter term?
A :	30-Year loans are the best option for those with a tighter budget. Your monthly payment will be substantially lower. If you can afford just a little more each month, a shorter term can save you a great deal of money. Consider this example: Someone borrowing $150,000 can save $83,200 over the life of his or her loan simply by taking a 20-year term instead of 30 years. Yet their payment is only $162.30 extra per month.

Q :	I’ve heard that simply making extra principal payments each month can help you save in the same way as having a shorter term. Is that true?
A :	It is. By making extra payments you reduce the total amount of interest you pay and reduce your principal balance faster. To see how this works in your case, ask your loan consultant for an example.

Q :	When is a good time to refinance?
A :	It makes sense to refinance whenever your monthly savings will earn back your out-of-pocket cost quickly. Simply estimate what your closing costs will be to refinance, and divide the costs by your projected monthly savings. If your payback time is under three years, it’s a good time to refinance.

Q :	How much should I put aside for closing costs when I get a new mortgage?
A :	Plan on paying roughly 3-4% of your mortgage amount in closing costs. This will cover attorney’s fees, title insurance, interest in advance, tax escrows and other common items. It’s also a good idea to have at least two months housing payments as reserve once you close.

Q :	Is there any way I can get out of paying so much money at closing?
A :	Yes. Lenders offer special no closing cost loans. The interest rates are a little higher, but they’re often perfect for people with plenty of income but low savings. To see if it makes sense for you to pay closing costs or not, ask your loan consultant.

Q :	What kind of documentation will I need when I apply for my mortgage?
A :	You’ll need to bring along a few key items. They are: • Current mortgage and insurance information • W-2 forms for the two most recent years. • Three months of bank statements for each bank or investment account. • Several recent pay stubs for both borrowers • A copy of the purchase and sale agreement on the home (for purchase mortgages). • A copy of the deposit check given to the realtor.

Q :	What if I’m self-employed and don’t have W-2 income?
A :	Documentation is slightly different if you’re self-employed. Instead of W-2s, bring two years tax returns to verify your steady income. You may also need a year-to-date financial statement.

Q :	Can I use a gift to help with my down payment?
A :	Definitely. Gifts are a very popular source of down payments. The only requirement is that they come from a family member and can be documented.

Q :	How long does it typically take to get approved?
A :	With proper documentation, generally you can have your decision in under 24 hours.

Q :	How long does it take to close on a mortgage?
A :	Generally, you should allow 2 to 4 weeks for the entire process.

Q :	How do I apply for a loan with Monarch Mortgage?
A :	It’s easy to apply. Just fill out our App online. If you wish, you may call us @ 636-239-1400 and we can fill an App out over the phone or we can fax one to you. Please call your loan consultant with any questions or for help with the application. Thank You !!!